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Toyota 21, Nhtsa 13, U.s. 3, Detroit 2, Dave Shepardson 2, North America 2, Us 2, Akio Toyoda 1, Japan 1, Blair 1, Jay Rockefeller 1, California 1, David Strickland 1, Texas 1, Financial Pirates 1, United States 1, Ford 1, Toyota Has 1, Mississippi 1, Washington 1,
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    April 7, 2010
    4:30 - 5:00am EDT  

blair. >> it is the auto maker's responsibility to make sure they comply with federal safety standards. that is their responsibility. we are not branding these cars safe. it is our job to enforce and to please the marketplace -- to police the market place, which we do. the automakers have to uphold their obligation to not only comply with our standards but the state of the art. it is my job to make sure they called to the standards. this agency will hold the line. >> david strickland, head of the nhtsa, testifying before congress in his agency's role in auto safety. the agency follow those words with an announcement that it will seek a fine against toyota of $16 million for failing to notify officials .
starting as off is dave shepardson of "detroit news." many people saw the headline -- regulators seeking a fine of $16.40 million against toyota. the statement said "if upheld." why does it say that? >> toyota gets to formally denied decide whether it wants to appeal the fine.
this is by far the largest ever find that nhtsa has sought to impose. the previous was $1 million against general motors in 2004. the amounts are symbolic, given that these are companies with hundreds of billions of dollars in revenue. $16 million is a rounding error for them. >> what happens next? have you heard from toyota? have you heard from toyota? if it goes@@@ @ @ @ @ @ @ @ @ @
is there some history of fines against auto companies? >> it was not until 2000 that fines for increased to $15 million. there are going up at the rate of inflation. with the exception of that 2004 find against general motors, $1 million because they failed to notify nhtsa about when chilled wiper defects in 600,000 vehicles -- the evidence suggested that gm had known about this for two years. there have not been a lot of fines because of the companies generally want to recall the vehicles quickly. that is fewer vehicles you have to fix and there is less damage to their reputations.
nhtsa needs the cooperation of the auto companies to make the current regulatory system work. >> the transportation secretary also said that nhtsa will continue to review over 70,000 documents on the situation. does that mean there are more fines to come? >> there is a good chance. they are looking at three separate recalls. this law is strict. as soon as the company determines the have a safety defect, they have five days to notify nhtsa and recall the vehicles. there is not a lot of time. in the case of toyota, the first recall for sticky, pedals, they allegedly awaited for months or more. there is another recall of 5.4 million vehicles over pedals that got stuck in floor mats, which led to the horrible incident last august where four people were killed in california, which got this issue going.
they are looking at a third recall as to timeliness as well. >> you said this probably would not financially cripple toyota, given that they have $200 billion in profits a year. >> in revenue. >> what about its image? if they are find this money and it goes through and they agree to pay -- >> that is the whole issue. toyota's image has taken a huge blow. we're talking two or three months of tremendous publicity across the globe. no one could avoid hearing about the issue of sudden acceleration. they have recalled 8.5 million vehicles. they now face over 200 class- action lawsuits over deaths and sudden acceleration issues. some owners want full refunds for their toyotas. others want to be compensated because the value has gone down since this happened. the other issue on the find is that could potentially be used against them to help convince
juries and judges that those claims have merit. the 60 million is about the fact that it is another tarnish -- the $16 million is about the fact that it tarnishes a company once had the highest safety reputation. >> what is the company doing to win back customers? >> money. they had a great month because we ought to give more incentives to customers than they have ever done. they did not need for years to give incentives for the prius and other vehicles. they hike that to $2,000 a vehicle. that is lower than many competitors, but less -- but more than the past. they have offered free maintenance for two years. the strategy is about convincing core customers not to leave and trying to prod others with great deals. >> how have other companies responded? >> some are adding more incentives.
general motors, ford, and others tried to poach toyota customers by saying "premier toyota in. we will give you a good deal." all is fair in love and the car business. >> the toyota president testified in february about the situation. let us listen to a little bit of what he had to say. >> toyota has, for the past few years, been expanding business rapidly. i fear the pace at which we have grown may have been too quick. i would like to point out here that our priorities have traditionally been the following. first, safety. second, quality. third, volume. these priorities became confused. we are not able to stop, think, and make improvements as much as we were able to before.
our basic stance -- to listen to customer voices and make better products -- has weakened somewhat. we pursued growth and speed at which we were able to develop our people and our organization. we should be mindful of that. i regret that this has resulted in the safety issues described in the recall we face today. i am deeply sorry for any accident that toyota drivers have experienced. especially, i would like to extend my condolences to the members the family for the accident in san diego. i would like to send my prayers, and i will do everything in my power to ensure that such a tragedy never happens again. since last june, when i took
office, i have personally placed the highest priority on improving quality over quantity. i hope to share that with our stakeholders. as you know, i and the grandson of the founder. all the toyota vehicles bear my name. for me, it is as though i am as well. i, more than anyone, which for toyota cars to be safe and for our customers to feel safe when they use our vehicles. under my leadership, i would like to reaffirm our value of placing safety and quality the highest on our list of priorities, which we have held firmly from the time we have founded. i would also stress to live by a
system by which we can ensure we value. third, i would like to discuss how we plan to manage quality- control as we go forward. up to now, any decisions on conducting recalls have been made by the customer quality engineer division at toyota motor corporation in japan. this division confirms whether there are technical problems and makes decisions for the necessity of a recall. however, reflecting on the issues today, we lacked the customer first attitude. to make improvements on this we will make the following changes to the recall decision making process. when recall decisions are made, a step will be added in the process to ensure the management will make responsible decisions from the perspective of customer
safety first. to do that, we will devise a system in which customers forces around the world will reach our management in a timely manner and also a system in which each region will be able to make a decision as necessary. further, we have formed a quality advisory group composed of respected outside experts from north america and around the world to ensure that we do not make misguided decisions. finally, we will invest heavily in quality in the u.s. through the establishment of an incentive for quality excellence -- the introduction of a new position. the product's safety executive and the sharing of more responsibility within the company for product quality decisions, including recalls.
even more importantly, i will ensure the members of the management team actually drive the cars and that they check for themselves where the problem lies, as well as its severity. i myself am a trained test driver de as a professional. i am able to check the problem in a car and understand how severe the safety concern is in a car. i drove the vehicle in the accelerator pedal recall as well as the prius, comparing the vehicles before and after the remedy. i believe that only by examining the problems on site can we make decisions from the customer perspective. one cannot rely on reports or data in the meeting room. through the measures i have just
discussed, and with whatever results we obtained from the investigation we're conducting in cooperation with nhtsa, i intend to further improve on the quality and the principle of putting the customer first. my name is on every car. you have my personal commitment that would go to will work vigorously and unceasingly to restore the trust. >> that was toyota president and ceo akio toyoda. nhtsa has said they are seeking a fine of $16.50 million against one iota. toyota has taken a number of important steps to improve
customer safety related matters as part of our strength and commitment to quality assurance. these include the appointment of a new quality officer for north america and a greater role for the region in making safety- related decisions. joining us is dave shepardson of "detroit news." in that statement, did you hear toyota saying they did know about this problem and did not go forward? >> they are not going that far. they're saying they got too big too fast. remember, toyota is an amazing success story. they went from 10% u.s. market share in 2000 to around 17%. this year, the almost out sold general motors to become the largest retail auto maker in the united states. they built plants over the u.s.. they built a truck plant in
texas. they build a plant in mississippi. i think what he is saying is that his company became the world's largest automaker. they did not do enough to keep track of quality. there are other critics who said toyota -- a former u.s. executive said it had been hijacked by financial pirates at the company. as they got so big, did they forget the values that made them the company they are today? >> this potential find -- some are saying it is a warning to other automakers. what is the law here that toyota potentially violated? >> one is the safety act which created nhtsa and sets the rules for recall. the second is the tread act, which was passed in 2000 in the wake of the for firestone recalls and accidents. congress is very likely to pass new autos if you legislation sometime this year to fight the
fines we are talking about from $16 million to phar-mor, to give more money to, nhtsa to add more auto safety investigators, to potentially require black boxes on vehicles. there is a device called a great shift override which would give drivers a tool to prevent runaway vehicles if accelerator pedals got stuck. there is a possibility of changing the paradigm automakers face to a much more aggressive nhtsa that has no reason not to be tough on the companies. you had top members of the senate and house saying that nhtsa failed to do its job and needs to be fixed, according to senator jay rockefeller. i think this is going to change how nhtsa and how the auto executives react. >> we're using eight washington acronym. it is the national highway traffic safety administration. wh